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The Week Ahead: 5 Things to Watch on the Economic Calendar

Published 18/06/2017, 06:38 pm
© Reuters.  5 Things That Could Move Markets in the Week Ahead

Investing.com - Following a busy week packed with central bank meetings, market players will focus on a handful of Federal Reserve speakers in the week ahead, as they look for more clues on future monetary policy moves.

Traders will also keep an eye out on U.S. housing data to gauge if a recent downtick in consumer spending and inflation is translating into lower home prices and slack in sales.

Meanwhile, in Europe, market players eagerly await the start of Brexit negotiations between Britain and the European Union.

Investors will also focus on flash survey data on euro zone business activity for fresh clues on the health of the region’s manufacturing and services sector.

Elsewhere, traders will pay close attention to retail sales and inflation data from Canada as they look for more clues on the health of the economy and the timing of a rise in borrowing costs.

Ahead of the coming week, Investing.com has compiled a list of the five biggest events on the economic calendar that are most likely to affect the markets.

1. Fed Speakers

A handful of Fed policymakers are due to make public appearances this week that may offer insight into the likelihood of higher interest rates in the months ahead.

Monday sees New York Fed President William Dudley and Chicago Fed President Charles Evans make public appearances.

On Tuesday, Fed Vice Chair Stanley Fischer, Boston Fed President Eric Rosengren and Dallas Fed President Rob Kaplan are scheduled to deliver comments.

Fed Governor Jay Powell is due to speak before the Senate Banking Committee on Thursday.

Finally, Friday sees St. Louis Fed President James Bullard, Cleveland Fed President Loretta Mester and Fed Governor Powell make public remarks.

Last week, the Fed raised interest rates as widely expected and maintained plans to go ahead with another rate hike by year-end. The central bank also provided greater detail about how it plans to reduce its massive $4.5 trillion balance sheet.

Despite the Fed's relatively hawkish message, market players remained doubtful over the Fed's ability to raise rates as much as it would like before the end of the year due to a recent run of disappointing U.S. economic data.

Futures traders are pricing in less than a 15% chance of a hike at the Fed's September meeting, according to Investing.com’s Fed Rate Monitor Tool. Odds of a December increase was seen at about 35%.

2. U.S. Housing Data

The National Association of Realtors is to release data on existing home sales for May at 10:00AM ET (1400GMT) on Wednesday, amid forecasts for a decline of 0.7% to 5.55 million, following a slump of 2.3% a month earlier.

On Friday, the Commerce Department is to publish a report on new home sales for May at 10AM ET. The data is expected to show an increase of 5.5% to 600,000, following a drop of 11.4% in April.

Besides the housing-related data, this week's rather light calendar also features reports on initial jobless claims and flash Markit manufacturing and service sector activity surveys.

Investors are likely to continue to fret over the latest headlines coming out of Washington for any new fallout from the investigation into the Trump campaign's possible ties to Russia.

The deepening turmoil surrounding President Donald Trump's administration intensified doubts that he would be able to follow through on his campaign promises for tax cuts, deregulation and fiscal stimulus.

3. Brexit Negotiations

Britain's Brexit minister David Davis and the European Union's chief negotiator Michel Barnier are due to start negotiations over Britain's departure from the bloc in Brussels on Monday, kicking off a two-year divorce process due to end by March 2019.

Key subjects to be negotiated include the size of any "divorce" bill, how the U.K. will trade with the EU once it leaves and the status of EU nationals and Britons living elsewhere in the EU.

Markets now assume British Prime Minister Theresa May's failure to secure her party a majority will lead to a softening of the government's Brexit stance to give greater priority to a close trading relationship with the EU.

Fighting for her political survival, May has been trying to strike a deal with a the Democratic Unionist Party, a small Northern Irish Protestant party.

4. Flash Euro Zone PMIs

The euro zone is to publish preliminary data on manufacturing and service sector activity for May at 0800GMT (4:00AM ET) on Friday, amid expectations for a modest decline.

Ahead of the euro zone PMI's, France and Germany will release their own PMI reports at 0700GMT and 0730GMT respectively.

Earlier this month, the European Central Bank closed the door on more interest rate cuts, judging the bloc's economy to be rebounding, but said inflation looks to remain weak for years so it still needs to keep extraordinary stimulus in place.

5. Canadian Retail Sales & Inflation Figures

Canada is to release April retail sales figures at 8:30AM ET (1230GMT) Thursday, amid expectations for a gain of 0.3%, following an increase of 0.7% in March. Core sales are forecast to climb 0.7%, after falling 0.2% a month earlier.

On Friday, Canada is to publish data on May consumer price inflation at 8:30AM ET (1230GMT). The data is expected to show that inflation increased 0.3% last month, after rising 0.4% in April. On a yearly base, CPI is projected to climb 1.5%.

Hawkish comments last week from top Bank of Canada officials, including Governor Stephen Poloz, flipped markets toward an earlier rise in borrowing rates there.

Stay up-to-date on all of this week's economic events by visiting: http://www.investing.com/economic-calendar/

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